DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), NAGPUR, NAGPUR V. MS AVC HOMES, NAGPUR

ITA 383/NAG/2023

AI Insights

The case involves appeals by the Revenue against the orders of the Commissioner of Income Tax (Appeals) - 3, Nagpur, which had deleted additions and penalties imposed on M/s. AVC Homes, a firm engaged in real estate activities. The additions and penalties were based on documents seized during a search and seizure operation under section 132 of the Income Tax Act at the residential premises of Vyankatesh Kunawar, a partner in the assessee firm, and at the business premises of M/s Saptagiri Builders. The seized documents allegedly contained details of unrecorded income from the sale of plots. The CIT(A) found insufficient evidence to uphold the additions and penalties, leading to the Revenue's appeals. However, due to the monetary limit set by the CBDT Circular, the appeals were dismissed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633376 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: CIT vs. Anil Bhalla [2010] 322 ITR 191 (Delhi), CENTRAL BUREAU OF INVESTIGATION CBI VERSUS Vs. SHUKLA & ORS [1998] 1998 taxmann.com 2155 (SC), COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2017] 77 taxmann.com 245 (SC), PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-2 VERSUS UMESH ISHRANI [2019 (4) TMI 1947 - BOMBAY HIGH COURT], THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-21, MUMBAI VERSUS M/S. LAYER EXPORTS PVT. LTD. [2016 (10) TMI 1024 - ITAT MUMBAI], S.P. GOYAL VERSUS DEPUTY COMMISSIONER OF INCOME- TAX [2002 (4) TMI 952 - ITAT MUMBAI], NISHANT CONSTRUCTION PVT. LTD. VERSUS ACIT, CIRCLE-5, AHMEDABAD [2017 (3) TMI 1048 - ITAT AHMEDABAD], D.A. PATEL VERSUS DEPUTY COMMISSIONER OF INCOME- TAX [1999 (3) TMI 639 - ITAT MUMBAI], INCOME TAX OFFICER, 5 (2) (2), MUMBAI VERSUS KRANTI IMPEXPVT. LTD. AND VICE-VERSA [2018 (3) TMI 424 - ITAT MUMBAI]
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Document seized; Tax effect; Search and seizure; Loose papers
• Section: 143(3); 132

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI K.M. ROY, HON’BLE ACCOUNTANT, MEMBER ITA No.383 & 384/NAG/2023 (Assessment Year: 2018-19) Dy.CIT – Central Circle – 2(1) 3rd Floor, Aayakar Bhavan Civil Lines, Nagpur – 440001 v. M/s. AVC Homes 243, Axon House Ring Road, Chatrapati Nagar Nagpur - 440015 PAN – AAZFM2044B (Appellant) (Respondent) Assessee Represented by : Shri Saket Bhattad, Advocate Revenue Represented by : Shri Sandipkumar Salunke, CIT(DR) Date of conclusion of hearing : 18.03.2025 Date of pronouncement of order : 09/06/2025 O R D E R PER K.M. ROY, ACCOUNTANT MEMBER The Revenue has filed these appeals challenging two impugned orders passed by the learned Commissioner of Income Tax (Appeals) – 3, Nagpur [hereinafter in short “Ld.CIT(A)”] vide respective Order No. & Date of order as stated below: - ITA No. & A.Y. Order No. Passed under section Dated ITA No. 383/NAG/2023 (A.Y. 2018-19) CIT(A)-3, Nagpur/10603/2016-17, CIT(A)-3, Nagpur/10691/2017-18 & CIT(A)-3, Nagpur/10449/2018-19 U/s. 153C r.w.s. 143(3) 28.09.2023 ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 2 ITA No. & A.Y. Order No. Passed under section Dated ITA No. 384/NAG/2023 (A.Y. 2018-19) CIT(A)-3, Nagpur,/10737/2017-18 U/s. 271D 28.09.2023 2. Since both the appeals are related to same assessment year it is deemed expedient to pass a consolidated order. We now take up the appeal in ITA No.383/NAG/2023 for A.Y.2018-19, first. ITA No. 383/NAG/2023 (A.Y. 2018-19) 3. Revenue has raised following grounds of appeal in its appeal: - “1. The Ld. CIT(A) has erred in deleting the addition of Rs.64,82,600 /- on account of undisclosed income u/s 69A of the Act made by the AO which was based on the seized Document No. B/6 seized from residential premises of Shri Vyankatesh Kunawar (Party A-2) who is a partner in the assessee firm and the said documents have the evidentiary value. 2. The Ld. CIT(A) has failed to appreciate the facts that the addition of Rs.64,82,600/-was made on account of undisclosed income u/s 69A of the Act based on the seized Document No. B/6 seized from residential premises of Shri Vyankatesh Kunawar (Party A-2) who is a partner in the assessee firm, and the same was offered by the assessee for taxation during the course of assessment as mentioned in Para-3 of the assessment order. 3. The Ld. CIT(A) has failed to appreciate the facts that that during the course of search/survey, loose paper or any incriminating documents hold the high value and the same would be treated as base for making any addition and is sufficient to take it as evidence against the assessee. 4. The Ld. CIT(A) has failed to appreciate the facts that there are noting on the loose papers and the onus to explain the noting on the loose paper lies on the assessee. 5 Any other ground that may be raised during the course of appellate proceedings.” ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 3 4. Brief facts of the case are, assessee is a firm engaged in the business of all kinds of allied activities in real estate business. Search and seizure action was conducted under section 132 of the Act at Residential premises of Vyankatesh Kunawar on 25.06.2019 and Survey action at business premises of Assessee. During the search and Seizure Document B-6 Pg 39-89 was found at the premises of Vyankatesh Kunawar and Document A-1/1,A-1/2, A-1/3, A-1/ 13 and A-1/15 were found at premises of M/s Saptagiri Builders, relating to assessee. The seized document provided details pertaining to unrecorded income against sale of Plots amounting to total of Rs.1,24,29,273/-. During the assessment proceedings, Assessing Officer after considering the documents and submissions of the Assessee framed assessment order under section 143(3) r.w.s 153C on 28.05.2021 by making addition on account of Undisclosed Income under section 69A of Rs.64,82,600/-. 5. Being aggrieved, Assessee preferred an appeal before Ld.CIT(A). After considering the submissions of the Assessee, Ld.CIT(A) allowed the appeal of the Assessee by deleting made by the Assessing Officer under section 69A of the Act. 6. Being aggrieved, Revenue is in appeal before us by raising the above grounds. 7. At the outset, the learned Authorized Representative (in short “Ld.AR”) appearing for the assessee submitted that the tax effect on the amount disputed by the Revenue is below the revised monetary limit of Rs.60 lakhs applicable to ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 4 appeal before the Tribunal, as per CBDT Circular No.09 of 2024, dated 17/09/2024. Thus, the learned AR submitted that the Revenue’s appeal being covered under the aforesaid Circular is not maintainable. 8. The learned Departmental Representative agreed that the tax effect on the amount disputed by the Revenue is below the monetary limit of Rs.60 lakhs for the appeal under consideration. 9. Having heard the arguments of rival parties, perused the material available on record and gone through the orders of the authorities below, we are of the view that the tax effect on the amount disputed by the Revenue in the present appeal is below the revised monetary limit of Rs.60 lakhs as per CBDT Circular cited supra. The tax demand involved in the appeal is Rs.50,07,8096/- as per Form 36. It also stands clarified by the CBDT that the revised monetary limit of Rs.60 lakh, as per the aforesaid CBDT Circulars, would also apply to all pending appeals. In view of the aforesaid, Revenue’s appeal deserves to be dismissed. However, the Revenue is given liberty to seek recall of this order if, at a later point of time, it is found that the appeal falls under any of the exceptions provided in the CBDT Circular referred supra. 10. In the result, appeal filed by the Revenue is dismissed. ITA No. 384/NAG/2023 (A.Y. 2018-19) 11. Revenue has raised following grounds of appeal in its appeal: - ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 5 “1. On the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty of Rs.1,34,20,434/- levied by the Addl.CIT which was based on the seized document No. B/6 of party A-2 from Shri Vyankatesh Kunawar and the said document have the evidentiary value. 2. On the fact and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the facts that during the course of search/survey, loose papers or any incriminating documents hold the high value and the same would be treated as base for making any addition or levying penalty and is sufficient to take it as evidence against the assessee. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the facts that noting on the loose papers and the onus to explain the noting on the loose papers lies on the assessee. 4. Any other ground that may be raised during the course of appellate.” 12. The solitary issue raised by the Revenue is relating to deletion of penalty of Rs.1,34,20,434/- under section 271D levied by the Addl. CIT, Central Range-2, Nagpur based on the seized document No. B/6 of party A-2 from Shri Vyankatesh Kunawar considering that the document has an evidentiary value and receipt in cash over Rs.20,000/- towards sale of plots is clearly explicit ex-facie on such document. 13. We have heard both the sides and perused the material available on record. It is pertinent to refer to the observation of the Ld.CIT(A) who has granted relief by holding as under: - “The first ground of Appeal is whether Ld. Addl. JCIT is justified in levying the penalty of Rs. 1,34,20,434/ - u/s 271D of Income Tax Act, 1961 at the amount equal to amount considered to be received in cash in excess of Rs. 20,000/-, without considering the facts and circumstances of the case. The entire case revolves around Document B-6 which is found from the Residential Premises of Mr. Vyankatesh Kunnawar. After a rigorous and comprehensive review of Document B-6, it is evident that it's a loose paper. This fact is also acknowledged by the AO in his questionnaire dated 01/02/2021. ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 6 During the course of Arguments, the Ld. AR. Pointed out various defects in the documents and stated that there have been no corroborative evidences brought forth by the AO in support of additions made by him. The Ld. AR stated that the document recovered from the search premises are non- speaking and dumb documents. I have gone through the relevant document, Assessment Order and submission of the Ld. AR. Upon careful examination of the mentioned documents, it becomes evident that certain pages appear to be rough calculation workings. Notably, the documents lack explicit mention or evidence indicating that the appellant received any cash amount. There are no signatures from customers confirming cash payments to the appellant, no revenue stamps on any page, and a significant portion of the columns remain unfilled. Significantly, the said documents were received from the residential premises of Mr. Vyankatesh Kunnawar. More importantly, the presumption of Section 132 (4A) goes against the person from whose possession documents are seized or impounded. In the present case, the documents were seized from some third party residence, which cannot be at all presumed that the particular documents found at the third party residence are the documents of the appellant, and it will be illegal to raise a demand on appellant with this presumption. Therefore, there is no question of addition on basis of said documents in the hands of appellant where the document seized from third person without any corroborative evidence. The appellant has cited various case laws on loose sheets while arguing the case orally. It is settled law that Loose Sheets without corroborative evidence have no evidentiary value. In the case of CIT vs. Anil Bhalla [2010] 322 ITR 191 (Delhi), the Hon'ble Tribunal held that until independent evidences exist, the addition on the basis of notings and jottings cannot be upheld. Reliance can be placed on- 1. CENTRAL BUREAU OF INVESTIGATION CBI VERSUS Vs. SHUKLA & ORS [1998] 1998 taxmann.com 2155 (SC) 2. COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2017] 77 taxmann.com 245 (SC) 3. PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-2 VERSUS UMESH ISHRANI [2019 (4) TMI 1947 - BOMBAY HIGH COURTI 4. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-21, MUMBAI VERSUS M/S. LAYER EXPORTS PVT. LTD. [2016 (10) TMI 1024 - ITAT MUMBAI] 5. S.P. GOYAL VERSUS DEPUTY COMMISSIONER OF INCOME- TAX [2002 (4) TMI 952 - ITAT MUMBAI] ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 7 6. NISHANT CONSTRUCTION PVT. LTD. VERSUS ACIT, CIRCLE-5, AHMEDABAD [2017 (3) TMI 1048 - ITAT AHMEDABAD 7. D.A. PATEL VERSUS DEPUTY COMMISSIONER OF INCOME- TAX [1999 (3) TMI 639 - ITAT MUMBAI 8. INCOME TAX OFFICER, 5 (2) (2), MUMBAI VERSUS KRANTI IMPEXPVT. LTD. AND VICE-VERSA [2018 (3) TMI 424 - ITAT MUMBAI It seems to me the pages are just an excel working for the purpose of putting a proposal by Field Executives as explained by the ld.AR. It is true that there are no cogent corroborative evidences on record. There are no statements from any of the customers recorded by the AO on record to prove cash transaction. There were no hard cash seized. This is another crucial facet of appeal is the absence of supporting corroborative evidence to substantiate the assertions made by AO. There is no corroborative evidence that on record and finding on record that such document has materialized into transactions. Therefore, I adjudicate the first ground in favour of appellant and is therefore \"allowed\". Hence Penalty of Rs1,34,20,434/- u/s 271D for violation of Section 269SS contending the whole amount received in cash stands deleted. The Second Ground raised by the Ld. AR is whether the Assessing Officer erred in law and on facts by levying the penalty u/s 271D in absence of Concrete Evidence on record. I have already discussed in the preceding paragraphs that there was no corroborative evidence on record. There is no clear evidence of accepting or taking loans or specified sum. No such definite evidence is available in this case to show that the appellant contravened provisions of Section 269SS to justify the penalty under Section 271D of the Income Tax Act. In the case of ITAT in Navin Kumar v/s JCIT (2006) 99 TTJ 267 98 ITD 242 (TM) (ITAT Amritsar), it is held that unless the fact of breach of provision is proved beyond doubt and the act or omission falls within four corners of the provision of law, penalty should not be levied. I agree with the contention of Ld. AR that the presumption can only arise on the basis of 'books of account' or 'documents' or 'assets' found during search only against the person from whom it is seized. In the present case, the documents were seized from some third party residence, which cannot be at all presumed that the particular documents found at the third party residence are the documents of the appellant, and it will be not legal to raise a demand on appellant with this presumption. In my considered opinion, the AO erred in law and on facts by levying the penalty u/s 271D in absence of Concrete Evidence on record. Therefore, I adjudicate the Second ground in favour of appellant and is therefore \"allowed\". ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 8 14. At the time of hearing before us, Ld.CIT(DR) (in short “Ld.DR”) could not pointed out any infirmity to dislodge the cogent findings of the Ld.CIT(A). As already held above, it is not clear that whether the transaction has actually taken place because the Assessing Officer did not make any meaningful investigation with the customers of the flat as to whether they have actually paid cash and further subsequent cross linking with sale deed. The Assessing Officer failed to correlate these receipts with the registered sale deed to conclusively establish that the transactions have crystalized. The half-baked inquiry fails to inspire confidence about the materialization of these transactions. When the transactions itself are non-existent and unfounded, imposition of penalty is unsustainable because the same cannot be imposed in vacuum. Accordingly, there is no scope of interfering with the order of the Ld.CIT(A) who has justifiably deleted imposition of penalty. Accordingly grounds raised by the revenue are dismissed. 15. In the result, appeal of the revenue is dismissed. 16. To sum-up, both the appeals filed by the revenue are dismissed. Order pronounced in the open Court on 09/06/2025 Sd/- V. DURGA RAO JUDICIAL MEMBER Sd/- K.M. ROY ACCOUNTANT MEMBER DATED: 09/06/2025 Giridhar, Sr. PS (On Tour) ITA No.383 & 384/NAG/2023 M/s. AVC Homes Page | 9 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. //True Copy// By Order Sr. Private Secretary ITAT, Nagpur "